Norouzi v Determining Authority established by s 106Q of the Health Insurance Act 1973

Federal Court of Australia|2023-01-30|Before: Collier J

The originating application for judicial review, filed by the applicant on 6 April 2021, be dismissed with costs to be taxed if not otherwise agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

COLLIER J 1 Before the Court is an originating application for judicial review filed by the applicant, Mr Hamid Norouzi, on 6 April 2021. The originating application was in the following terms: Decisions The Applicant applies to the Court to review the following decision: 1. The part of the decision of the Respondent that relates to repayment of $459,555.55, as set out in its Final Determination dated 5 March 2021 (Repayment Determination). Section 11 (1) ADJR Act 1977 Details of claim The Applicant is aggrieved by the decision because: 1. The Applicant has been ordered to repay $459,555.55 to the Commonwealth as a result of the decision of the Respondent. Grounds of application The grounds of review in relation to the decision of the Respondent are: 1. The Respondent did not provide the Applicant with a Draft Determination pursuant to section 106T of the Health Insurance Act 1973 (Cth) (Act), or the opportunity to respond to its proposed findings, prior to making the Repayment Determination under section 106TA of the Act as set out in the Second Final Determination. Particulars (a) The Respondent invited an initial submission from the Applicant on 11 December 2020. (b) Section 106SA of the Act requires that the Respondent provide a practitioner under review with an opportunity to make written submissions about the directions the Respondent should make in the Draft Determination. (c) Section 106T of the Act requires that the Respondent take into account those submissions, and then provide a copy of its Draft Determination to the person under review, before making a Final Determination under section 106TA. (d) Having invited an initial submission on 11 December 2020, the Respondent failed to provide the Applicant with a Draft Determination prior to providing a Final Determination and in doing so, failed to afford the Applicant procedural fairness. 2. The Respondent misunderstood its function and thereby constructively failed to carry out its statutory task with respect to the direction that the Applicant repay the whole amount of Medicare benefits that were paid for the MBS item 597 and 599 services, in connection with which the Applicant was found by the Committee to have engaged in inappropriate practice in the amount of $459,555.55 (less the amount for the item that the Applicant voluntarily repaid). Particulars (a) The Respondent was required by section 106U(1)(cb) of the Health Insurance Act 1973 (Cth) to make a direction that the Applicant repay to the Commonwealth the whole or a part of the relevant Medicare benefits; (b) The Respondent wrongly held that it could not establish that a lower item number could have been charged; and (c) The Respondent failed to give adequate weight to that fact when deciding on a repayment amount. 3. When making the Repayment Determination, the Respondent failed to give any, or any adequate, weight to: (a) The positive findings of the Committee about the Applicant's conduct; (b) The fact that the Applicant provided all of the services under review and there was no suggestion of any dishonesty; (c) The fact that all of the services could have been billed using a different MBS item number and that in any cases that related only to urgency, the Applicant's conduct would not have been inappropriate in respect of that item number; (d) The windfall that will be received by the Commonwealth as a result of the Repayment Determination; (e) The Applicant's junior position and his reliance upon advice provided to him by senior practitioners and the National Association for Medical Deputising Services; (f) The geographic and workforce situation which led to the Applicant providing a very high volume of services; and (g) The fact that the primary issue in dispute during the Committee hearing was a subjective test of whether or not something was urgent, which ought lessen the Applicant's culpability. 4. When making the Repayment Determination, the Respondent placed too much weight on the following considerations (including because those considerations may have been irrelevant or of minimal relevance) (a) The Applicant's national ranking for billing MBS item number 597; (b) Concerns around the Applicant's clinical input, where that clinical input by itself would not have been sufficient to meet the Respondent's sampling criteria for extrapolating across all services; (c) Whether the Respondent needed to find that a separate MBS item number was billable for the services rendered by the Applicant; and (d) Whether or not taxation issues can be pursued separately by the Applicant. Orders sought 1. An order quashing the Repayment Determination of the Respondent. 2. The Respondent pay the Applicant's costs of the application.

BACKGROUND 2 At material times the applicant was a general practitioner employed by House Call Doctor. House Call Doctor is an after-hours medical services provider operating in the Wide Bay region, and the applicant provided after-hours care under Medicare. 3 On 13 March 2018, a delegate of the Chief Executive of Medicare requested, pursuant to s 86 of the Health Insurance Act 1973 (Cth) (HIA) that the Director of Professional Services Review (second respondent) conduct a review of the applicant's provision of services from 1 September 2016 to 31 August 2017. On 15 March 2018, the second respondent resolved to undertake a review as requested by the Chief Executive, and on 21 June 2018 wrote to the applicant and invited him to make written submissions referable to the review. Subsequently, the second respondent decided to refer the applicant to a committee under s 93 of the HIA for investigation as to whether he had engaged in inappropriate practice. 4 The Committee issued notices to produce documents and held a hearing on 26 and 27 November 2018. The applicant attended this hearing and was legally represented. The applicant gave evidence at the hearing and made submissions following its conclusion. 5 On 11 November 2019, the Committee published its report. In that report, the Committee determined that the applicant had engaged in inappropriate practice "with respect to 67% of all MBS item 597 and 68% of all MBS item 599 services rendered during the Review Period". 6 On 7 June 2020, the applicant commenced judicial review proceedings under the Administrative Decisions (Judicial Review) Act 1977 (Cth) and the Judiciary Act 1903 (Cth) seeking an extension of time in which to review the Committee's report. Those proceedings were dismissed by Logan J.

Quashed decision 7 On 11 December 2019, the first respondent invited the applicant to make submissions as to the directions that should be made as a consequence of the Committee's report. Submissions to that effect were provided by the applicant in correspondence dated 28 January 2020. 8 The first respondent completed a draft determination on 27 February 2020 which, in part, outlined the draft orders it proposed to make. The applicant provided submissions in response to the draft determination, after which a final determination was made by the first respondent on 11 May 2020. By that final determination, the applicant "was to be reprimanded and counselled; required to repay $459,555.55 being the Medicare benefits that were paid in connection with which the Applicant was found to have engaged in inappropriate practice; and, was disqualified from rendering MBS items 585, 588, 591 and 594 for a period of 6 months". 9 Subsequently, the applicant sought judicial review of this decision in this Court on 7 June 2020. In that proceeding, Logan J quashed and remitted the repayment component of the final determination for reconsideration: Norouzi v The Director of The Professional Services Review Agency [2020] FCA 1524 (Nourouzi No 1). In doing so, his Honour ordered: (a) the direction that the Applicant repay the amount of $459,555.55 being the Medicare benefits that were paid for the MBS items 597 and 599 services in connection with which the applicant was found by the second respondent to have engaged in inappropriate practice, less the amount for the item that the Applicant repaid voluntarily, be quashed; (b) the question as to whether the applicant ought to be directed to repay, in whole or in part, the said amount of $459,555.55 be remitted to the third respondent for reconsideration according to law; and (c) save as foresaid, the application for orders under the ADJR Act and the Judiciary Act in respect of that determination be dismissed. 10 Following this remittal, the applicant provided further submissions in relation to the repayment component on 11 January 2021. On 5 March 2021, the first respondent re-made its decision referable to the repayment aspect, and in doing so determined that the applicant "was required to repay $459,555.55 being the Medicare benefits that were paid in connection with which the Applicant was found to have engaged in inappropriate practice" (repayment determination). 11 The applicant seeks review of the repayment determination in this proceeding.

SUBMISSIONS 12 At the hearing on 18 November 2021, the applicant stated that he no longer pressed grounds 3 and 4 of his originating application for judicial review.

Applicant's submissions 13 In relation to ground 1, the applicant submitted, in summary, as follows: Ground 1 concerns the non-observance of procedures required by law to be observed in making the determination and the resulting breaches of natural justice; A practitioner must be afforded procedural fairness at all times during an investigation under Part VAA of the HIA: National Home Doctor Service Pty Ltd v Director of Professional Services Review and Others (2020) 276 FCR 338; This procedural fairness is to be afforded by inviting a practitioner to make written submissions prior to the making of a draft determination, and inviting further submissions after the publication of the draft determination; Under s 106TA of the HIA, the publication of a draft determination, in addition to inviting the practitioner referable to who it is made to make written submissions within 14 days, is a condition precedent to making a final determination. Failure to do so results in a decision that is unlawfully made: Project BlueSky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; Following the Orders made by Logan J on 21 October 2020, the first respondent invited the applicant to make submissions referable to any repayment direction that should be made under s 106U(1)(cb) of the HIA; This invitation was "bland", and "[i]t gave no clues as to what findings the Authority intended to make, if any, or what matters were considered important by the Authority with respect to whether a repayment direction of the whole or part of the relevant benefits would be made", in addition to failing to set out the terms of any proposed direction in draft form; and Given no draft direction was published, the applicant was not given the opportunity to address the issues raised against him, and as such was not afforded procedural fairness. 14 In relation to ground 2 the applicant submitted, in summary, as follows: The first respondent misunderstood its function, and constructively failed to carry out its statutory task; In Nourouzi No 1 Logan J quashed the direction that the applicant "repay the amount of $459,555.555, being the Medicare benefits that were paid for the MBS items 597 and 599 services in connection with which the applicant was found by the second respondent to have engaged in inappropriate practice, less the amount for the item that the applicant repaid voluntarily", and the ground pleaded in this respect before Logan J was in the same terms as ground 2 in these proceedings; In Norouzi No 1, the first respondent, in the opinion of Logan J failed "to appreciate that, in the circumstances found by [the] committee, a scheduled item number was always applicable to the service" and that "[t]here were 'non-urgent' item numbers which were put forward as applicable on the basis of the findings made by the committee". This error has occurred again on the part of the first respondent by "failing to appreciate that a scheduled item number was always applicable, and that this does not contradict any finding of the Committee"; The first respondent failed to engage with the submission of the applicant that ordering full repayment would result in a windfall to the Commonwealth in that "non-urgent treatment numbers were always applicable"; and Ultimately, the first respondent misunderstood its power and function in assessing the amount repayable to the Commonwealth by the applicant.

Second respondent's submissions 15 In respect of ground 1, the second respondent submitted, in summary, as follows: The applicant prosecuted ground 1 on two bases, namely: (a) the first respondent breached a "statutory condition" by failing to "publish" a draft determination; and (b) by not being provided with a draft determination, the applicant was denied procedural fairness. Neither of these bases give rise to legal error on the part of the respondents; The applicant was provided with a draft determination, in accordance with s 106U of the HIA, on 28 February 2020, and this was provided to the applicant with the Committee's final report; • At [36] of the draft determination, it was stated that the first respondent intended to make a direction that the applicant "repay $459,555.55 being the Medicare benefits that were paid for the MBS item 597 and 599 services in connection with which the Applicant was found to have engaged in inappropriate practice, less the amount of the item that the Applicant voluntarily repaid". By correspondence dated 3 April 2020, the applicant suggested changes to this draft determination; • Given this chronology, and regardless of the Orders made by Logan J, s 106T of the HIA was complied with; The decision of the first respondent was made in accordance with the Orders of Logan J; • Logan J only quashed the aspect of the determination that related to repayment, stating: [111] Reading s 106U and s 106TA of the HIA together, the intention appears to be that a Determining Authority will make one final determination, which may contain one or more directions. I can see no basis for the setting aside or quashing of the whole of the final determination, only the direction as to repayment. On that subject, the matter will have to be remitted to the Determining Authority for reconsideration according to law… • The Orders made by Logan J is no way required the first respondent to issue the applicant with an additional draft determination referable to repayment; There is no legislative basis for concluding that the applicant ought to have been provided with an additional draft determination under the HIA in the event that the draft determination was not quashed. As Hill and Marshall JJ observed in Lee v Maskell-Knight [2004] FCAFC 2 at [37]: Put simply, Division 5 does not seem to contemplate that there could be more than one draft determination but rather that the draft determination is to be made once only and within 14 days after the Determining Officer receives the Committee's report. • Under s 106TA of the HIA, the first respondent is only required to take into account submissions made in response to a draft determination in making a final determination; • Under s 106U(1) of the HIA, the use of "or" clearly indicates the directions contained in the draft determination need not be identical to those in the final determination; The applicant was not denied procedural fairness: • The applicant's submission that "'[i]n providing an invitation to give a written submission within one month, the Authority engendered a legitimate expectation in the Applicant that the Authority would give his submission due consideration and publish a Draft Determination to him for comment…" was flawed; • As Gummow, Hayne, Crennan and Bell JJ observed in Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 at [65]: …the phrase "legitimate expectations" when used in the field of public law either adds nothing or poses more questions than it answers and thus is an unfortunate expression which should be disregarded. • This position was echoed by Kiefel, Bell and Keane JJ in Minister for Immigration and Border Protection v WZARH (2015) 256 CLR 326 in the following terms: The use of the concept of "legitimate expectations" as a criterion of an entitlement to procedural fairness in administrative law has been described in this Court as "apt to mislead', "unsatisfactory" and "superfluous and confusing"… … The "legitimate expectation" of a person affected by an administrative decision does not provide a basis for determining whether procedural fairness should be accorded to that person or for determining the content of such procedural fairness… • In any event, for a breach of procedural fairness to constitute error, it must give rise to practical injustice, namely a denial of the opportunity to make submissions and that denial being material to the decision that is made: SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152; and • The applicant was aware of, and given the opportunity to provide submissions on, the repayment direction and its amount given: (a) in his submissions made in response to the s 106SA invitation dated 28 January 2020,56 the Applicant made submissions with respect to whether a repayment direction ought be made and, the amount of any such order; (b) by the draft determination, the Applicant was advised that the DA considered that it was appropriate to direct that the Applicant repay to Medicare the amount of $459,555.55.58 Since this time, the Applicant has therefore been on notice of the 'worst case scenario', that is, that he may be required to pay the whole amount; (c) in the Applicant's submissions in response to the draft determination, the Applicant addressed the proposed repayment direction and its amount; (d) the DA's quashed decision determined that the Applicant was required to repay $459,555.55 being the Medicare benefits that were paid in connection with which the Applicant was found to have engaged in inappropriate practice; (e) after the Repayment Determination was quashed by Logan J and was remitted to the DA for re-determination according to law, the Applicant was invited to make any additional submissions he wished to the DA in respect of the repayment direction; and, (f) the Applicant took up that invitation and provided written submissions on 11 January 2021 that wholly concerned the repayment direction and its amount. 16 In respect of ground 2, the second respondent submitted, in summary, as follows: The substance of ground 2 was identical to the successful ground pleaded before Logan J in Norouzi No 1; The first respondent, on remittal, made the finding that the applicant repay the total amount on grounds that were plainly open to it, and consistent with Part VAA of the HIA and the reasoning of Logan J; The decision of the first respondent was discretionary and entirely within its remit in this respect; In respect of ground 2 the applicant sought that the Court engage in merits review, which is impermissible; and As long as the first respondent was aware that it could direct that only partial amounts be repaid, which it clearly was, the first respondent could not be said to have misconstrued its function and failed to carry out its statutory task.

CONSIDERATION 17 Provisions of the HIA relevant to the determination of the applicant's application are as follows: 106T Draft determination (1) The Determining Authority must, after taking into account any submissions made by the person under review in accordance with section 106SA: (a) make a draft determination in accordance with section 106U relating to the person; and (b) give copies of the draft determination to the person and to the Director. (1A) The Determining Authority must comply with subsection (1) within 1 month after the last day on which the person under review may make submissions in accordance with section 106SA. Note: The period for making the draft determination may be affected by section 106TB. (2) The copy of the draft determination given to the person under review must be accompanied by a statement inviting the person to make written submissions, within 14 days after the day on which the copy of the draft determination is given to the person, suggesting changes to any directions contained in the draft determination in accordance with section 106U. Note: The period for making submissions may be affected by section 106TB. (3) The person under review may, within the 14 day period referred to in subsection (2), make written submissions to the Authority suggesting changes to the directions contained in the draft determination. (4) Failure to comply with subsection (1) within the period referred to in subsection (1A) does not affect the validity of the draft determination. 106TA Final determination (1) If the Determining Authority has made a draft determination under section 106T, the Authority must, within one month after the end of the 14 day period within which the person under review may make submissions, and after taking into account any submissions made by the person during that 14 day period, make a final determination in accordance with section 106U relating to the person under review. Note: The period for making the final determination may be affected by section 106TB. (2) Failure to make the final determination within that period of one month does not affect the validity of the determination. 106U Content of draft and final determinations (1) A draft determination or a final determination must contain one or more of the following directions: … 18 It is not in dispute that the applicant was to be afforded procedural fairness in the making of a final determination under the HIA: see, for example, National Home Doctor Service Pty Ltd. 19 For the reasons that follow, ground 1 of the applicant's application does not succeed. 20 First, the applicant was provided with a draft determination, in accordance with s 106T of the HIA, on 28 February 2020, in addition to the Committee's final report. That draft determination also clearly outlined the Committee's intention to direct that the applicant repay $459,555.55, consisting of the Medicare benefits that were paid for the MBS item 597 and 599 services in connection with which the applicant was found to have engaged in inappropriate practice, less the amount he voluntarily repaid. As the second respondent submitted, this was a "worst case scenario" in respect of which the applicant had been on notice since 28 February 2020. 21 Second, as the Full Court explained in Lee at [37], the first respondent was not obliged to provide the applicant with additional draft determinations for his comment. This is the case unless a determination is quashed in its entirety. It was not the case in this proceeding: Logan J only quashed the part of the direction referable to the applicant's repayment of Medicare benefits. 22 Third, I am satisfied that the applicant was not denied procedural fairness in respect of the making of the repayment direction. The applicant was afforded the opportunity to, and did in fact make, submissions to the first respondent prior to the making of the repayment direction. The submission of the applicant that "[i]n providing an invitation to give a written submission within one month, the Authority engendered a legitimate expectation in the Applicant that the Authority would give his submission due consideration and publish a Draft Determination to him for comment…" is unpersuasive. There is no evidence before the Court, or any basis on which the Court can infer, that the first respondent did not take into account the applicant's later submissions in making the repayment determination. 23 Fourth, and in any event, for a breach of procedural fairness to constitute error, it must give rise to practical injustice, namely a denial of the opportunity to make submissions and that denial being material to the decision that is made: SZBEL. The applicant was given the opportunity to make submissions referable to the repayment direction, which he did on 11 January 2021. It follows that the applicant was not denied procedural fairness in this respect. 24 In respect of ground 2, the applicant sought to blur the lines between merits and judicial review. This point was made clear to the applicant in Norouzi No 1, in response to ground 3 in that proceeding, which was in the following terms: 3. The making of the decision was an improper exercise of power by taking irrelevant considerations into account, namely, the findings that the regulatory requirements of MBS items 597 and 599 were not met in circumstances in which: a. The decisions "to bill an urgent rather than non-urgent Medicare item" were not "conduct" in connection with rendering or initiating services for the purposes of section 82 of the [HIA]; b. The Committee misconstrued or misapplied the requirements of items 597 and 599; c. There was no logical pathway to the findings that the regulatory requirements of MBS items 597 and 599 were not met because the Committee failed to make critical intermediate findings of fact which were probative to the questions of whether, in relation to each professional attendance: i. The Applicant was of the opinion that the patient's medical condition required treatment within the unbroken after-hours period in, or before, which the attendance was requested; ii. In the circumstances that existed and on the information available when the opinion was formed, the Applicant's opinion would be acceptable to the general body of medical practitioners; and iii. The treatment identified as being required within the unbroken after-hours period could not be delayed until the start of the next in-hours period. 25 As Logan J rightly noted in Norouzi No 1 at [108]: SZVFW is also fatal to ground 3, which also requires a conclusion of unreasonableness to succeed. Having regard to the particulars furnished under this ground and as correspondingly developed in submissions, it is, on analysis, really a solicitation to merits review. As particularised, a persuasive case is made out as to why the particular disqualification might not have been imposed by the Determining Authority. But that does not mean that, objectively, the disqualification imposed was unreasonable. It was just one of a range of possible outcomes. (emphasis added) 26 The same is true in respect of ground 2 in this proceeding: the Court cannot concern itself with assessing the correctness of the first respondent's finding that a lower item number could not have been charged, and, in the applicant's submission, the failure of the first respondent to attach sufficient weight to this consideration. In essence the applicant seeks to cavil the correctness of the first respondent's findings in making its second repayment determination. 27 To examine the validity and persuasiveness of the applicant's arguments in this respect would be to engage in an assessment of the merits of the first respondent's findings on the way to reaching its conclusion referable to repayment. If the roles had been reversed, it is entirely plausible that the applicant would have come to a similar finding to the one he now seeks be reached. Nevertheless, an assessment the likes of which the applicant seeks cannot occur, and the same was clearly articulated by Logan J.

CONCLUSION 28 For the reasons I have outlined I dismiss the applicant's originating application for judicial review, with costs. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Collier.

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